Climate equity is in, but what is out

Poznan, December 9, 2008

A good way to know the issues that are important in the climate conference is to look at the ‘side event’ list – the workshops, conference and releases that governments and non-governmental groups organise at the side of the conference. This year, two issues dominate – REDD – the mechanism to pay for the world’s forests and what developing country should do to reduce their emissions. So, different northern think-tanks are working feverishly to propose how developing countries can reduce their emissions, get rewarded and be happy (see reports in mitigation section).

But with these two ‘predictable’ issues, there is a third issue that has made it through the cracks – how will the world share the carbon budget, which we all know is very limited by now. So, this year, unlike any CoP in the past, there are groups and proposals on equity – different ways to slice up the earth’s future. The politics are clear. The world is now moving towards accepting a 2 degree target, which means that it will need to limit emissions to 450 ppm co2e. With the world already close to 430 ppm of co2e, clearly there is little left to go around. So, the issue of sharing the resources, the budget and the burden becomes critical.

Chinese proposal for equityToday, in what is clearly a first and perhaps a game-changer, the Chinese Academy of Social Sciences presented its version of the carbon budget for equity and sustainability. Interestingly, the academy says, that while there have been a variety of proposals with different interpretations of equity principle for burden sharing and emission entitlement, there is an “imbalance”. Only three of the 43 odd proposals for equity, come from researchers of the South.

The Chinese proposal is built on two concepts – to provide for basic needs, and says there is no space in the world for luxurious and wasteful emissions and to provide for geophysical needs of the world. That is, if the emissions are more than the geophysical limits, then the world has to reduce its needs to adjust to what the world can withstand. It accepts that the world has to reduce emissions by 50% by 2050, which is then the global carbon budget, which needs to be shared between every individual in the world.

The budget is then allocated to every individual for basic needs. This budget is then adjusted in terms of geographic; climatic and resource endowment. From 1900-2050, global carbon budget is 2272.5 Gtco2, which is 352.5 tco2 in accumulative emissions per capita; 2.33 tco2 per capita per year.

The proposal has two transfers – on the transfer of the budget and the other transfer of financial resources. As the developed countries have already exhausted their full share – till 2050 – the proposal computes what is the price of this ‘gift’ to developed countries by the developing countries. It also makes transfer of emissions for basic needs to industrialized country. The total carbon budget acquired by developed countries will be in excess of the global average level. For instance, US carbon budget will increase to 7.71 tonnes of co2 per capita, as compared to 2.33 tonnes of co2 per capita in the initial budget allocation. The non-annex 1 countries, initial budget reduces from its initial allocation of 80.5 per cent to 58.9 per cent. This basic entitlement scheme will be the basis of the trading scheme – countries like US, Canada and Australia will be required to purchase 70% of their future emissions.

It proposes a progressive carbon tax – to increase rate of taxation on the basis of the excessive emissions – limited; moderate; severe and proposes that this tax should not be higher than the cost of renewable energy introduction, so that the framework can lead to the transition to cleaner energy.

The proposal also makes it clear that this is not ‘soft’ on China. Under the proposal, China will have substantial deviation from business as usual.

It is clear that the deal in Copenhagen needs to be a fair deal. The question is if this is the way China wants to go to operationalise the common but differentiated responsibility principle?

The proposal asks:a. Should equity be discussed among people or between political entities, as international equity does not necessarily mean equity among individuals in a country? Therefore, emissions should be first allocated for individuals for their survival and basic needs.

b. We need to promote equity to protect the rights of all people on this planet. So, what then should be the basis of the carbon budget – the number of people in the present or the number of people in the future? It concludes that as the current generation inherits the emissions of the past, and it also determines the size of the population of the future, carbon should be budgeted to individuals of the current generation. This will be a disincentive for further population growth.
c. Equity needs to take into account the stock of emissions in history, at the present and in the future.

It says, that the current proposals – related to emission rights per capita of based on history emissions, do not effectively address these principles of equity. The proposal on contraction and convergence, says the Academy does not take into account the historical emissions of countries, when it asks for convergence of all at a level. On the other hand, the Greenhouse Development Rights (another proposal on equity on the table) only takes into account historical emissions, but fails to budget emissions for future needs. In addition, there are few methodological issues, which need to be sorted out, regarding the conceptualization of the threshold values and the calculation of accumulative emissions in history.

Allocations, adjustment and transfer of payments
1. There are two ways to make the global initial climate budget – accumulative emission budget per capita and emission budget per capita per year. The accumulative (historical) emission budget per capita is 325.5 tco2 from the year 1900 to 2050, while the per capita emission budget is 2.33 tco2.

The historical emission has consumed a total budget of 171.1 tco2 in the past 105 years, which means that the rest (roughly) half has to be used for the remaining 45 years. It is possible to meet the global climate protection goal within the carbon budget if every “earth citizen” is able to share equally the future emission space – which will not exceed 3.94 tco2 per person per year, under scenario A – global emissions peak in 2015, 10% higher than 2005 level.

2. Adjustments are then made to this allocation, to take into account climate conditions – the need for heating and cooling; geographic conditions, resource endowment. The overall adjustment is in the range of (-)20 to (+) 78 per cent, as these factors can offset one another to some extent.

3. This allocation shows that there are some countries, which have already used up their carbon budget for the future up to 2050. For instance, the accumulative historical emission in the US, is about 3 times its total carbon budget. Also, few developing countries like South Korea and Saudi Arabia have managed to live within their carbon budget in the past, but their remaining budget looks insufficient for them to meet their basic needs in the future.

4. There is a need for a basic emission right – for the rich and the poor – considered as an entitlement aligned to the equity principle.

5. The budget is as follows; Accumulated emissions of Annex 1 (industrialized countries is 788.1 Gtco2, which is 310 Gtco2 in excess of their total budget, which should be 478.1 GtCo2. The US and the EU are responsible for the largest shares – 62% and 32.8% respectively. Only Italy and Australia have a certain carbon budget left but not enough to meet their future requirements.

The budget needed by Annex 1 countries to meet their basic needs is calculated at 145.6 Gtco2. This is ‘given’ from the surplus budget of the developing countries.

6. Overall carbon budget surplus from Non-Annex 1 countries is estimated at 83%; the surplus in India is 93%, while that in Indonesia is 92%.
7. From 1900-2050, global carbon budget is 2272.5 Gtco2, which is 352.5 tco2 in accumulative emissions per capita; 2.33 tco2 per capita per year.

8. As the developed countries have already exhausted their full share – till 2050 – the proposal computes what is the price of this ‘gift’ to developed countries by the developing countries. It also makes transfer of emissions for basic needs to industrialized country.

The total carbon budget acquired by developed countries will be in excess of the global average level. For instance, US carbon budget will increase to 7.71 tonnes of co2 per capita, as compared to 2.33 tonnes of co2 per capita in the initial budget allocation. The non-annex 1 countries, initial budget reduces from its initial allocation of 80.5 per cent to 58.9 per cent.

9. The ‘free transfer’ from the Non-Annex I to Annex I amounting to 455.7 GTCO2 between 2005-2050 at 10 Euro/ ton stands at 4.6 trillion Euro or about 100 billion Euro every year till 2050. This gift from the Non-Annex I is far higher than the financial assistance from the developed to the developing countries. The US and the EU get 50% and 33.4% of the gift respectively.

10. Because the Annex I will need more emission quota than the ‘free transfer’ as they cannot decrease their emissions immediately and the Non-Annex I have ‘surplus’, the proposal introduces the concept of ‘paid’ transfer. Under this, developed countries will have to pay the developing countries to utilize their emission surplus. For instance, India, which will have a budget surplus of 192 GTCO2 till 2050, will be paid by the developed countries to use this emission.

11. Interestingly, China will not have any surplus to sell. In fact it will be required to cut emissions or even buy it from other developing countries.